Finding Text
Finding 2024-013: Material Weakness in Internal Control and Material Noncompliance – Equipment and Real Property Management Assistance Listing Program Title and Number: Airport Improvement Program , Infrastructure Investment and Jobs Act Programs, and COVID-19 Airports Programs (20.106), CDBG Entitlement/Special Purpose Grants Cluster (14.218) Federal Agency: U.S. Department of Transportation, U.S. Department of Housing and Urban Development Pass-through Entity: N/A Award year: 2023 – 2024 Criteria or specific requirement: The City must follow equipment and real property management standards as required by 2 CFR section 200.313(c) through (e) which states that a physical inventory of the property must be conducted and the results reconciled with the property records at least once every two years and that adequate maintenance procedures must be developed to keep the property in good condition. Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the federal award identification number), who holds title, the acquisition date, cost of the property, percentage of federal participation in the project costs for the federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sales price of the property (2 CFR section 200.313(d)(1)). Condition: The City was not able to provide supporting documentation that an inventory of federally acquired equipment had been completed at minimum once, in the prior two years, nor were they able to produce maintenance records for all inventory items that were selected for testing. Additionally, the assets are not tracked separately from other City assets with property records which note the serial number, date placed in service and specific location of the asset. Cause: The City did not have established policies and procedures in place to ensure an inventory of federally acquired property is completed at minimum once every two years, and that inventory records are sufficiently detailed, nor are there established policies and procedures in place for the upkeep and maintenance requirements of federally acquired equipment. Effect: The City may misplace or misappropriate an asset that was acquired using federal dollars, or an asset acquired using federal monies may fall into disrepair and not be fully utilized. Context: For CDBG, an inventory of federally acquired equipment had not been completed once in the prior two years. We sampled five assets valued at $476,392 out of a total of 28 assets purchased using grant funds since inception valued at approximately $2,300,000 at June 30, 2024. Of that sample there were two additions valued at $192,180 out of a total of three additions for the fiscal year ended June 30, 2024 valued at $210,930. Sufficient property records were not maintained for all selections. The sample was not intended to be, and was not, a statistically valid sample. For AIP, an inventory of federally acquired equipment had not been completed once in the prior two years. We sampled three assets valued at $287,340 out of a total of six assets purchased using grants funds since inception valued at approximately $393,000 at June 30, 2024. The sample included the only addition during the year ended June 30, 2024, valued at $7,166. Sufficient property records were not maintained for all selections. The sample was not intended to be, and was not, a statistically valid sample. Questioned Cost: None Repeat Finding: No Recommendation: We recommend that the City implement controls over their federally funded equipment and real property to ensure they are compliant with Uniform Guidance requirements. Views of Responsible Officials: Management agrees with the finding.